Qatar Airways has announced its intention to buy a 25% minority stake in Virgin Australia from Bain Capital, which bought most of the airline out of voluntary administration in 2020.
The purchase is subject to approval from Australia’s Foreign Investment Review Board (FIRB). If approved, Virgin Australia will launch flights to Doha under a wet lease arrangement with Qatar Airways.
Contents
Virgin Australia flights to Doha
As part of the deal, Virgin Australia would launch long-haul flights from Melbourne, Sydney, Perth and Brisbane to Doha in mid-2025. But Virgin Australia wouldn’t be using its own aircraft or crews, instead operating these under a wet lease agreement with Qatar Airways.
This means the flights would be sold as Virgin Australia flights with VA flight numbers, but use Qatar Airways planes and be staffed by Qatar-based crews. Under such an arrangement, I would expect that the meals, entertainment and on-board amenities would be provided by Virgin Australia.
Qantas similarly wet leases Finnair aircraft for its Sydney-Singapore and Sydney-Bangkok flights.
Having Virgin Australia wet lease aircraft from Qatar Airways would not directly add that many Australian jobs. But Virgin Australia is selling this move as benefiting the Australian economy more broadly through more flights. Virgin also claims this will help it to be a stronger domestic competitor.
“I am delighted that our closer relationship allows us to put our ‘toe in the water’ regarding long-haul international, as well as the ability to deepen other areas of existing cooperation, including between our respective loyalty programs and code sharing arrangements,” Virgin Australia CEO Jayne Hrdlicka said.
Virgin Australia has not operated long-haul flights since giving up all its wide-body aircraft in 2020, other than a relatively short-lived Boeing 737 service to Tokyo. It used to fly Airbus A330s into Asia and Boeing 777s to Los Angeles. Ironically, some of those Boeing 777s now fly for Qatar Airways with their original Virgin Australia cabins still intact.
“This partnership brings the missing piece to Virgin Australia’s longer-term strategy and is a huge vote of confidence in Australian aviation. Importantly, it will further strengthen Virgin Australia’s ability to compete over the long term, which will inevitably translate into more choice and even better value airfares for consumers as well as additional Australian aviation jobs,” Hrdlicka added.
More Australians feed into Qatar Airways’ global network
Qatar Airways’ motivation here is abundantly obvious. It wants to add more flights to Australia, but the Australian government blocked its requests after Qantas lobbied against it.
In order to maximise the capacity it’s currently allowed, Qatar Airways already flies daily Airbus A380s – its largest aircraft – to Sydney and Perth. It also runs a “ghost flight” every day between Melbourne and Adelaide, just to take advantage of a loophole that lets the airline add a second daily flight to Melbourne.
Ideally, Qatar Airways would like to operate twice daily to Australia’s four major cities, using smaller planes than the A380. (Qatar Airways only has a small number of A380s in its fleet and these planes have an older Business Class product.) This would allow the airline to offer more and better connections through Doha, as well as more overall capacity into Australia.
Unable to add more of its own flights from Australia to Doha, getting Virgin Australia to add flights is the next best thing. Even if Virgin operated these flights using their own aircraft, Qatar Airways would benefit from the increased feed into its global network beyond Doha.
I would expect that Qatar Airways would maintain one daily flight each from Sydney, Melbourne, Perth and Brisbane to Doha. Qatar might switch its Sydney and Perth flights to Boeing 777s or Airbus A350s, instead of the Airbus A380.
Virgin Australia would then operate a second daily flight from each city at a different time. All the flights would connect with one of the two main eastbound or westbound banks at Doha’s Hamad International Airport.
There is minimal demand for travel purely between Australia and Qatar. Almost all of the passengers on these Virgin Australia flights would be connecting to or from somewhere else.
Regulatory approval still needed
As the ABC’s Ian Verrender noted, Qantas’ lobbying efforts against Qatar Airways adding flights to Australia seem to have backfired. Or, at least, that would be the case if the Australian government agrees to allow the acquisition and wet lease.
I personally think government approval is likely to come. The government would have a lot of explaining to do if it rejected it. But it’s not a given.
As Virgin Australia’s CEO notes, “This proposed investment is subject to regulatory approval. We do not take this for granted and have made submissions outlining the benefits of the transaction for Australian aviation, Australian travellers and the Australian economy.”
What does this mean for frequent flyers?
Virgin Australia and Qatar Airways have already been partners since 2022. Velocity Frequent Flyer members can already earn and redeem points on Qatar Airways, just as Qatar Privilege Club members can already earn and burn Avios for Virgin Australia flights. (Although, they now have to pay much higher charges to redeem Avios on Virgin Australia…)
Virgin Australia has made some bold claims about the benefits that this acquisition would bring for Velocity Frequent Flyer and Virgin Australia Business Flyer members, which it emailed on Tuesday. According to the airline, those benefits would include:
- Expanded codeshare arrangements that will provide your business with access to a greater range of international destinations;
- Increased earn and redemption opportunities for Velocity Frequent Flyer and Qatar Airways’ Privilege Club members;
- Broader access to great value fares; and
- New areas of potential cooperation including Sustainable Aviation Fuel.
While there are a lot of broad promises and buzzwords here, the true extent of the benefits are yet to be seen. The expanded codeshare arrangements, increased earn and redemption opportunities and “broader access to great value fares” could purely be a result of Virgin Australia adding flights to Doha, increasing capacity and the number of short connections available via Doha.
It’s yet to be seen if there will be any further, concrete improvements for Velocity members beyond just being able to fly on Virgin Australia marketed flights to Doha.
That said, one obvious benefit for Velocity members could be the option to upgrade on these flights between Australia and Doha using Velocity points.
I don’t think this move will lead to Virgin Australia joining an alliance or Velocity Frequent Flyer adopting Avios, as some have speculated. I don’t think this announcement is quite that consequential.
For now, we’ll have to watch this space.
Join the discussion on the AFF forum
What do you make of all this? You can read what AFF members have to say and share your own thoughts on the Australian Frequent Flyer forum:
